RBA Hikes Twice in 2026 — Cash Rate at 4.10%
The Reserve Bank of Australia has raised the official cash rate to 4.10% following consecutive 25-basis-point hikes at its February and March 2026 board meetings — a sharp turnaround from the easing cycle that took rates to 3.60% in mid-2025.
Why the RBA Reversed Course
Governor Michele Bullock confirmed the March decision was driven by a material pick-up in inflation during the second half of 2025, greater-than-expected capacity pressures in the labour market, and sharply higher fuel costs stemming from the Middle East conflict. The March vote was close — five members voted to hike, four voted to hold.
Impact on Mortgage Holders
The two consecutive hikes have added meaningful cost to household budgets:
- For a $600,000 mortgage with 25 years remaining, the cumulative impact of both hikes adds approximately $181/month to minimum repayments
- For a $1,000,000 mortgage, the March hike alone adds approximately $160/month
- Average owner-occupier variable rates have crossed 6% for the first time since April 2025
Property Market Implications
Rising rates are cooling borrowing capacity and dampening sentiment, particularly for first-home buyers who benefited from the 2025 easing cycle. Every 25-basis-point increase reduces borrowing capacity by approximately $30,000–$40,000 for a $1M loan.
Auction clearance rates in Melbourne have softened into the low 60s. Price growth, while still positive in Brisbane and Perth, has moderated from the strong pace seen in late 2025.
What’s Next
The next RBA meeting is May 5, 2026. Markets are divided on whether a third consecutive hike is warranted. The Board has signalled it is data-dependent, with Q1 CPI (due late April) the key input. A third hike would push the cash rate to 4.35% — the highest since mid-2024.
